Thursday, 21 August 2008

The South African Government has set out an ambitious proposal to deal with climate change in the coming years, including slapping a possible carbon tax on carbon dioxide spewing industries. Saying the world faced "a global climate emergency," the Environment Ministry unveiled the strategy geared to reducing greenhouse gases last week.

Environment Minister Martinus Van SchalkWtiyk said,"The world faces a global climate emergency. It is now clear that only action by both developed and developing countries can prevent the climate crisis from deepening." The plan, which includes stringent energy-efficiency measures, has been endorsed by the cabinet, though Parliament must still approve it. Finance officials are investigating ways of implementing the tax.

South Africa emitted about 446 trillion tonnes of CO2 in 2003 and forecasts growth to a maximum of 550 million tonnes a year by 2025, according to the Environment Ministry. Mr Van SchalkWtiyk said greenhouse gas emissions must stop growing by 2020 to 2025 at the latest, stabilise for tip to 10 years, and then decline in absolute terms.

"The aim is to limit global temperature increases to 2 degrees above pre-industrial levels." The plan has been welcomed by business associations and environmentalists as a significant step towards galvanising rich industrialised nations into addressing climate change.

The chief executive of National Business Initiative, a group advocating sustainable development, Andre Fourie, said,"The time is right for the country's private sector to show leadership by partnering with Government to develop a solutions-driven national climate change mitigation and adaptation response.

"The cost of inaction far outweighs the cost of mitigating the effects of climate change." South Africa's reliance on coal to generate electricity makes it a big emitter of carbon dioxide and other greenhouse gases per capita. State-owned power generator Eskom gets 90 per cent of its electricity from coal-generated plants. The supplier plans to develop three more coal-generated power stations in the next eight years.

The Government's proposal includes shifting to cleaner-burning coal by introducing more stringent thermal efficiency and emissions standards for coal-fired power stations. It also proposes providing incentives to renewable energy through a tariff system to be finalised by the middle of next year. Other aspects of the strategy include reducing transport emissions by imposing stringent fuel efficiency standards and promoting hybrid electric vehicles.

Professor Harald Winkler, from the University of Cape Town climate change department, said,"Our emissions per capita are higher than many other developing countries. .. due to our coal-based energy system. "Our analysis shows that putting a price on carbon has the single largest impact on emissions. "By using the price signal, it sends signals to all actors in the economy, and can shift behaviour."

THE Federal Government has shed some sunlight on its controversial means-tested solar rebate, with new figures showing the program is proving popular. Environment Minister Peter Garrett said yesterday applications for the $8000 rebate had grown at a significant rate since the renewed scheme was announced in the May federal Budget. In response, the Opposition, which has relentlessly attacked the Government for means testing the rebate, accused Mr Garrett of planning to lift the rebate income level from $100,000 to $150,000 in a face saving exercise.

"We've seen record growth in the number of solar rebate applications lodged since the Government acted on budget night to better target the rebate to those earning less than $100,000," Mr Garrett said. "An average of 522 applications have been lodged weekly since the Budget, with 794 in one week alone." He said this rate of application was higher than in any single week before the Budget and was 150 applications a week more than the average in the four weeks before the Budget.

Opposition climate change spokesman Greg Hunt said he expected Mr Garrett to announce he would raise the income bar on the means test. "Some industry sources believe Mr Garrett will soon announce the Government will increase the means test on the solar panel rebate program from $100,000 to $150,000," Mr Hunt said. "(This will) not scrap the means test, simply tweak it. It still makes it harder for many people who want to install solar in their homes. It would still treat the rebate as welfare, not a positive incentive to boost the renewable sector."

TOUGHER rules to make new houses greener could "easily" be achieved and are widely supported by people who recently built, or are planning to build, a home, a Government commissioned report has found. The report, obtained by The Sunday Age under freedom-of-information laws, found that the State Government could improve the energy rating scheme for new homes from five stars to six "immediately and with no major problems" and seven stars was "attainable in the medium term."

Spring Street is reviewing the five-star system, which makes it compulsory for new homes to have either a solar hot-water system or a rainwater tank. Houses are also required to have more energy-efficient building materials, restricted water pressure and reduced flow rates for shower heads and taps. Victoria's system was an Australian-first, but international comparisons have since found that for a climate like Melbourne's, 7.5 stars is the average mandated minimum in developed nations.

The Sunday Age believes that the Government is considering scrapping the choice between the rain tank and solar hot water and will instead focus on setting water, energy and stormwater targets and additional requirements for lighting, heating and cooling. The Government is facing stiff opposition from the building industry, which opposes more regulation on new homes. The Master Builders Association argues that more "stars" reduce housing affordability and existing houses should instead face energy-efficiency standards.

But the report - the only one of seven climate change policy documents the Brumby Government has not released publicly contradicts the argument that home builders are unwilling to pay extra upfront costs. The report's author, Wallis Consulting Group, conducted four focus groups with different home builders: some from the inner city, others from new suburbs, some who individually designed their homes, others who brought "off the plan."

Most of the home builders interviewed wanted the Government to be more "strict" with energy regulations and were happy with six stars. Six stars was explained as better insulation and orientation of the house on the block. The groups were told this would add 1-2% to building costs but reduce demand for heating and cooling by 24%.

The focus groups also backed seven stars - which includes even better insulation, ensuring no large unprotected windows faced east or west, and eaves on windows - but there was some resistance, particularly from those who felt it may be difficult to change the way a house sat on a small block, and from those who did not want to modify windows.

It was explained the seven stars would add 2-6% to building costs but reduce demand for heating and cooling by 45%. Eight stars, which included a high standard of insulation, careful design and orientation would, the focus groups were told, add 4-12% to the cost of a house but reduce heating and cooling needs by 65%.

This was supported only in greenfields developments such as housing estates. "This rating would act as a deterrent to most to build and the cost implications are seen to be large," the report found. But the authors did find universal support for the progressive tightening of regulations over time. The report also found that people have a "very poor and confused" knowledge of green energy and there was little appetite for regulation of lighting.

Farmers can rest easy when it comes to tackling their carbon emissions, if at least 1 per cent of their property is covered in trees, said climate-change researcher Dr Richard Eckard. He told an information session at the Waite Research Centre that the scheme was only asking 1-5 per cent initially, which may well be covered by a riparian zone or landcare activity. He also discussed the options and impacts of the emissions trading scheme on agriculture, particularly for dairy farmers.

He said although the Carbon Pollution Reduction Scheme did not feature agriculture, a 2015 target had been set for the inclusion. Dr Eckard said the myth that the scheme could cost farmers a permit price of up to $120 per cow was incorrect, because the figure was also based on carbon neutrality. Apart from tree planting, reducing stock and nitrogen fertiliser use, Dr Eckard said options to reduce emissions in agriculture were limited.

Wednesday, 20 August 2008

CYNICS may scoff, but China - the world's biggest greenhouse-gas emitter - is poised to lead world production of solar cells, wind energy turbines and low-carbon energy technology. The nation is already the world's largest renewable-energy producer as measured by installed generating capacity, according to a report from the Climate Group, a coalition of companies and governments that support solutions to global warming. The country is also the world's top manufacturer of solar cells and will be the leading exporter of wind turbines by 2009.

China's position as a renewable-energy consumer and manufacturer runs counter to its ranking as one of the world's biggest polluters and the country's rapid expansion of coal-fired power generation. About 75 per cent of China's electricity comes from coal, said Changhua Wu, China director of the Climate Group, who is based in Beijing.

"They have to do clean energy because they can't just do more and more dirty energy," said Michael Liebreich, chief executive officer of the London company New Energy Finance, which provides research to clean-energy investors. "We're seeing China as being a No 1, 2 or 3 player in lots of different sectors in this industry." China is closing older coal-fired power plants and replacing them with more efficient coal generators, Ms Wu said. While China will continue to rely on coal to fuel its rapid economic growth, state officials understand the need to move to clean energy, she said.

The Government wants to reduce the amount of energy China uses to produce each unit of economic output by 20 per cent in two years and has told its 1000 largest energy-consuming companies to cut their power consumption even more.

Meanwhile, the Government is imposing emergency traffic and industrial production restrictions to reduce pollution during the Olympic Games in Beijing. Leaders "know the urgency of the issue," Ms Wu said. "They know the impact of the issue not only to the world but to China." About 16 per cent of China's electricity came from renewable sources in 2006, led by the world's largest number of hydroelectric generators, according to the report.

China invested more than $US12 billion ($12.8 billion) in renewable energy in 2007, second only to Germany. The nation needs to invest another $US398 billion to reach its 2020 renewable energy goals, an average of $US33 billion a year, the report said.

"The system in China compared to many other countries seems to be more effective," Ms Wu said. "Basically, if the top leadership in Beijing decides to drive this kind of effort, they really get things done." China, which has doubled its output of solar panels in each of the last four years, exports them to developed countries which can afford the higher costs of generating electricity from the sun, New Energy's Mr Liebreich said. "Wind is a more mature industry," he said. "There isn't the same economic penalty today to implement wind." In 2007, each of China's 1.3 billion people emitted 5.1 tonnes of carbon, less than the 8.6 tonnes from each European and the 19.4 tonnes for each American.

Anyone keeping up with current affairs could be forgiven for thinking scientists are riven with doubt over climate change. Climate sceptics have enjoyed a resurgence as the federal Coalition danced around the introduction of carbon trading and heavy polluting industries began an intensive lobbying effort to convince the Federal Government of their special needs. The Page Research Centre, a think tank associated with the Nationals, last week hosted a forum that concluded that the science behind global warming was shaky.

Backbench MPs in both major parties have reportedly questioned the science on which the Federal Government's recent green paper is based. The noise has been loudest on the internet, where websites give voice to people who believe scientists are suppressing evidence to protect their careers. Unfortunately for the sceptics, and for everyone else, the evidence for human induced climate change is stronger than ever. Scientists the Herald spoke to where candid in their assessment that there was little room for doubt that global warming is happening and that the only changes in the past few months have been political changes.

"It looks as though the population believes climate change is serious and there seems to be momentum behind the issue, and there are some people who don't like that," says Chris Mitchell, head of the CSIRO's Climate, Weather and Ocean Prediction group. "There are still plenty of creationists around, and there are people who believe tobacco is not linked to serious health effects, and so there are still people who choose to ignore or doubt the amount of evidence for climate change."

Andy Pitman, an editor of the prestigious international Journal Of Climate, says there are good reasons why global warming sceptics cannot get a run in peer-reviewed scientific literature. "We would kill, literally kill, for a good paper that proved the science on global warming was wrong," Pitman says. "Then I could retire and accept my chair at Harvard. Unfortunately, that's not going to happen, and there's vast amounts of evidence why."

Pitman, who is also a lead author of the Intergovernmental Panel on Climate Change (ABC) and director of the Climate Change Research Centre at the University of New South Wales, says the reasons are simple: "In essence, the models we use to predict climate have been proven right." In the past decade, he says, refinements in computer simulations have allowed scientists to accurately predict climate in four dimensions: time, latitude, longitude and depth of the atmosphere.

"You feed in the greenhouse gas concentrations that we've seen, and the models predict extremely well the climate variations we've seen. If you don't do that, you get nothing. The mathematical probability of it being a chance mistake, or the wrong numbers, is astronomical." The claim, often cited by sceptics, that atmospheric temperature did not appear to match the levels predicted by climate models was revised by a reassessment of the data last year.

The research, partly carried out in Australia, ended up reinforcing the accuracy of existing climate models. Claims that solar activity may be causing recent global warming, reinforced in State Parliament by the Treasurer, Michael Costa, have been comprehensively demolished in peer reviewed journals. As weak spots in climate modelling have been eliminated one by one, commentators who do not believe carbon emissions lead to global warming have been retreating to smaller and smaller islands of resistance, says Pitman.

This is also the view of the Australian Academy of Science, established in 1954 along the lines of Britain's Royal Society. Its president, Kurt Lambda, told the Herald: "If there's been any change at all recently, it's that the observational evidence suggests we're moving away from the lower limits of the ABC projections towards more serious scenarios. I've certainly seen no evidence of scientists holding back on their views or suppressing findings or anything approaching that."

Concerned that debate about climate change is being muddied by slanted media reporting of the issue, the academy recently established a committee to try to present the clearest information to the public. "I think there is healthy scepticism and then there's unhealthy scepticism," Lambda says. "What you do see is people who will claim that simply because they have a PhD in engineering, that they are an expert on climate modelling." But labelling people "climate dangerous isn't helpful either, Lambda says. "The other side of the coin is the danger that people who want to discuss the legitimate scientific issues in public becoming less if they are going to be called dangers. We do need to keep giving scientists the freedom to (go) back and forth on these issues and apply their scepticism."

The CSIRO's Mitchell says any remaining doubt among Australian researchers of climate change would have surfaced in peer reviewed literature. "The fact is that a lot of the people working at the coalface of climate change research spend more time concerned they are underestimating some of the issues rather than exaggerating them."

Shell has warned environmentalists and ethical investors that failure to exploit tar sands and other unconventional oil products would worsen climate change because it would lead to the world burning even more carbon-heavy coal. Shell's chief executive, Jeroen van der Veer, said the world needed every kind of energy source it could find at a time of soaring demand. He said groups that had threatened to organise a ban on alternative fossil fuels should be careful because without unconventionals "the balancing fuel will be coal."

Shell revealed its tar sands operation posted 74 per cent profit growth to $351 million ($A374 million) in the second quarter, providing a relatively modest but important boost to total group profits of $A8.4 billion. A group of retail cooperative societies in Britain, known as the Co-Op, and wildlife group WWF are calling a meeting of ethical investment funds in September to try to put pressure on governments not to buy any oil supplies coming from tar sands. While environmentalists have claimed that tar sands extraction uses at least three times more energy than traditional oil, Mr Van der Veer said the "well-to-wheels" carbon footprint was only 15 per cent higher than conventional oil.

But Greenpeace questioned the carbon figures and expressed further concern at Shell's growing use of tar sands. A climate change campaigner at Greenpeace, Charlie Kronick, said,"Oil companies are increasingly dependent on these unconventionals as they get squeezed out of countries such as Nigeria and Russia. We fear tar sands are just the entrance ramp to oil shale, gas-to-liquids and other non-conventionals, which will just press the red button for climate change disaster."

Shell was upbeat about another controversial area, expressing optimism that it would be able to sign agreements "before too long" with Iraq despite non-governmental organisations claiming that British and US companies were exploiting the Western military presence there. Much would depend on the security situation, Mr Van der Veer said. Discussions are continuing over oil and gas operations in a country still riven by fighting five years after the overthrow of Saddam Hussein.

Shell said it could make no predictions about the future of oil prices, which have only just fallen back from recent highs of nearly $US150 a barrel. Shell said it planned for both high price and low-price scenarios but always with volatility in mind. Mr Van der Veer indicated that further analysis had led him to reconsider whether financial speculators were as much to blame for that volatility as he had suggested in the past.

Shell said it was pleased with its overall performance, which helped to produce a return on capital 26 per cent higher quarter-on-quarter, but its shares fell nearly 2 per cent to £18.08 ($A38.23) as investors worried about falling oil prices. A doubling of the price of oil to $US120 a barrel in the second quarter boosted profits, but Shell saw overall oil and gas production fall by 1.6 per cent to 3.1 million barrels in the second quarter versus a year earlier.

Tuesday, 19 August 2008

WHEN the tobacco industry was feeling the heat from scientists who showed that smoking caused cancer, it took decisive action. It engaged in a decades-long public relations campaign to undermine the medical research and discredit the scientists. The aim was not to prove tobacco harmless but to cast doubt on the science. In May this year, the multibillion- dollar oil giant Exxon-Mobil acknowledged that it had been doing something similar. It announced that it would cease funding nine groups that had fuelled a global campaign to deny climate change.

Exxon-Mobil's decision comes after a shareholder revolt by members of the Rockefeller family and big superannuation funds to get the oil giant to take climate change more seriously. Exxon-Mobil (once Standard Oil) was founded by the legendary John D. Rockefeller. Last year, the chairman of the US House of Representatives oversight committee on science and technology, Brad Miller, said Exxon-Mobil's support for sceptics "appears to be an effort to distort public discussion."

The funding of an array of think tanks and institutes that house climate sceptics and deniers also worried Britain's premier scientific body, the Royal Society. It found that in 2005 Exxon-Mobil distributed nearly $3 million to 39 groups that "misrepresented the science of climate change by outright denial of the evidence that greenhouse gases are driving climate change."

The Heartland Institute - essentially a free market lobby - emphasises that "the climate is always changing." Salinger's research studied variation in climate, so his research was enrolled in the denial campaign. Variations in the climate are normal, Salinger said, but this did not in any way weaken conclusions about the dangers of burning oil and coal. "Global warming is real," he said, and demanded reference to his work be removed. The institute refused. The Heartland Institute received almost $800,000 from Exxon-Mobil, according to Greenpeace's research based on Exxon-Mobil's corporate giving disclosures.

Another regular piece of evidence in the denial lobby's PR campaign is the "Oregon Petition." This urges the US Government to reject the Kyoto Protocol and claims there is "no convincing scientific evidence" for global warming. It is said to be signed by 31,000 graduates, most of whom appear to have nothing to do with climate science. The petition originated in 1998 with a scientist, Dr Frederick Seitz, who had been president of the US National Academy of Science in the 1960s (and a tobacco consultant in the 1970s). The petition was accompanied by a purported review of the science that was co-published by the George C.

Marshall Institute. This institute received at least $715,000 from Exxon Mobil since 1998. Claims about the world cooling, not warming, are common in the world of deniers. Cardinal George Pell referred to this possibility recently. In his recent book Heat, George Monbiot gives the example of the TV presenter and botanist, David Bellamy, who is also a climate sceptic. He told the New Scientist in 2005 that most glaciers in the world are growing, not shrinking. He said his evidence came from the World Glacier Monitoring Service in Switzerland, a reputable body.

The Lavoisier Group is certainly influential in the Federal Opposition. A senior figure in the group told Guy Pearse, author of High and Dry, a study of climate policy in Australia, that there "is an understanding in cabinet that all the science is crap." But perhaps the oil companies' PR campaign is not the main reason for the success of the climate change deniers.

There are at least three others. First, the implications of the science are frightening. Shifting to renewable energy will be costly and disruptive. Second, doubt is an easy product to sell. Climate denial tells us what we all secretly want to hear. Third, science is portrayed by the free market right as a political "orthodoxy" rather than objective knowledge. The tide slowly turned on tobacco denial and the science was accepted in the end. But climate is different. There are no "smoke-free areas" on the planet. Climate denial may turn out to be the world's most deadly PR campaign.

David McKnight is an associate professor at the University of New South Wales. He researches media, including public relations, and is the author of Beyond Right and Left: New Politics and the Culture Wars.

THE number of households applying for an $8000 government rebate on the cost of installing rooftop solar panels has risen dramatically, bucking predictions that a means test would ruin the solar energy industry. Federal Environment Minister Peter Garrett will tell a clean energy conference in Melbourne today that applications have risen by more than 150 a week since a $100,000 means test was introduced in the May budget. The surge in interest comes despite claims that some businesses had lost up to 80% of clients overnight.

While some had expected he would use today's speech to announce the means test was being lifted because of public pressure, Mr Garrett will instead predict that record growth in household solar systems will continue. This confirms that the Government took the right step in bringing funds forward for this program and ensuring that they go to those Australian families that most need financial assistance to install solar systems in their homes," he said.

The clean energy industry last night dismissed Mr Garrett's interpretation as misleading, arguing that a short-term rise in applications was always likely and that the real impact would not be clear for months. Critics of the means test have argued that few households on less than $100,000 can afford solar panels, which cost between $9000 and $21,000 without the rebate. Alternative Technology Association energy policy manager Brad Shone said the figures were likely to have been distorted by the recent arrival of mass applications from several new companies offering cut-price solar panels to neighbourhoods that buy in bulk.

It would be interesting to see who is making these applications. Some of these businesses have hundreds of people on their waiting lists," he said. Mr Shone said the figures would also have been affected by households who knew their income would exceed $100,000 in the next financial year, including new parents moving back to a double income, rushing to get in before June 30.

Government figures show the highest number of applications, 794, was recorded in the last week of June. The average for the four weeks before the budget was about 350, rising to 520 for the 10 weeks since. Markus Lambert, spokesman for clean power company Energy Matters, said it had lost some business but a massive fall in sales was yet to come.

He said other factors beyond the means test were helping keep the industry afloat. These included the introduction in some states and territories of incentive schemes for people who generated solar energy at home and fed it back into the electricity grid, and fears about rising energy prices under emissions trading.

Mr Lanibert said uncertainty over how long the rebate would be offered had also prompted some households to hasten their solar energy plans. The Government brought forward funding in the budget to boost the number of rebates available each year from 3000 to6000. It is understood it will meet demand beyond this, but there has been no announcement about how long it will continue.

"You do feel it is a little like everyone running to get in before the lights turn off," Mr Lambert said. Opposition environment spokesman Greg Hunt called on the Government to remove a gag on Environment Department officers giving evidence to a Senate inquiry into the means test so the figures could be properly examined.

A World Bank study this week blamed large increases in biofuels production in the US and Europe as the biggest cause of large rises in food prices around the globe since January 2002. The study, a draft of which has been cited in recent weeks by opponents of the boom in biofuels, concluded that biofuels demand, plus the related consequences of lower stocks of grain, speculation, large changes in land usage and food export bans, accounted for 70-75% of food price rises. The rest of the increase has been the result of a weaker US dollar and higher energy costs and resulting increases in fertiliser and transportation costs, it said.

The study, by World Bank economist Donald Mitchell, said that the large increases in production of biofuels in the US and Europe were part because of subsidies, mandates and tariffs on imports. "Without these policies, biofuels production would have been lower and food commodity price increases would have been smaller," Mitchell concluded.

The increased production of biofuels depleted stocks of grains and oilseeds, he said: "Without these increases, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate." However, the conclusions have been criticised as unrealistic. For example, Graham Hilton, director of Energy Crops of the UK and chairman of a renewable transport fuels group at the Environmental Industries Commission trade association, said that the report is "largely positive" about biofuels. The conclusions do not reflect the main contents, he said. The negative conclusions will make it very hard to attract investment into the sector, added Hilton.

Mitchell said that biofuel produced in Brazil, from sugar cane, is cheaper than biofuel made in the US or the European Union (EU), and has not raised sugar prices significantly because sugar cane production has grown fast enough to supply both the sugar and ethanol markets. He therefore made a case for a rethink on trade restrictions on biofuels: "Removing tariffs on ethanol imports in the US and the EU would allow more efficient producers such as Brazil and other developing countries, including many African countries, to produce ethanol profitably for export to meet the mandates in the US and EU. "biofuels policies which subsidise production need to be reconsidered in light of their impact on food prices."

The private equity investment round was cornerstones by Lend Lease Ventures, with additional investment from CVC REEF and CVC Sustainable Investments. BioPower has already received a $5 million Australian Government REDI grant and aims to use this, along with the private equity funding, to run pilot test programs for its bioWAVETM ocean wave power system and bioSTREAMTM tidal current power system in Tasmania.

BioPower CEO Dr Tim Finnigan commented: "We are very pleased to have Lend Lease working closely with BioPower Systems on developing commercial opportunities for our ocean power conversion systems in Australia, Europe and North America."

Murdoch University has become the first in Australia to sign a deal to use 15 per cent Green Power, achieving the highest percentage use of nationally accredited renewable energy of any university in the country. Currently the only other two universities to sign up to Green Power are in New South Wales and use 2.5 per cent.

The university is purchasing Green Power from Synergy Energy sourced from wind farms in Albany and Emu Downs. The contract will begin on December 1. Murdoch's initiative will prevent at least 3500 tonnes of CO2 being released into the atmosphere each year, which is equivalent to emissions generated by the electricity consumption of 500 homes.

Vice Chancellor John Yovich said Murdoch was also working with Synergy Energy to investigate other ways to reduce its energy usage and emissions, including use of photovoltaicsolar panels on its buildings to generate power onsite. The university had taken the initiative to reduce its emissions several years ahead of anticipated mandatory rules for universities as part of its overall strategy to "go green."

Monday, 18 August 2008

Never once on the countless occasions that Australian governments have restricted the sale of tobacco have they felt compelled to compensate the manufacturers for "significant reductions in their profitability." Why would they? The cigarette manufacturers knew what was coming (and had decided to invest anyway) and were blessed with rusted-on customers. But there was another - more important - reason why our governments didn't offer "compensation" to the industry they were trying to cripple.

To do it would have been to accept that the existing tobacco manufacturers had continuing "rights" that the government had to buy out in order to proceed. It would have helped create a precedent that would have undermined the right of Australia's parliaments to act as they saw fit. It would have undermined our sovereignty as voters. The Government's independent climate change adviser, Ross Garnaut, saw the danger clearly in his interim report delivered earlier this year.

As he put it,"There is no tradition in Australia for compensating capital for losses associated with economic reforms." Among the reforms for which he pointed out Australian businesses have not been compensated were the floating of the dollar, the introduction of the goods and services tax and the massive tariff cuts that Garnaut himself oversaw as Bob Hawke's economic adviser in the 1980s.

By the same token he pointed out that there had been no tradition of taking away from businesses the extraordinary windfall gains that they had enjoyed as a result of government decisions, including cuts in the company tax rate. In the case of emissions trading, businesses had been "aware of the risks of carbon pricing for many years." Many had "sought to reengineer their production processes to reduce their reliance on emissions."

He must have been worried that the argument wasn't getting through. In his draft report released just days before last week's Government green paper, he devoted an entire appendix to applying the argument explicitly to coal-fired electricity generators. There was "no basis" for the claim that generators had a "right to emit carbon dioxide and this right is being taken away by a policy change." As he put it "governments always retain the absolute right to vary policy and industry is generally cognisant of the risk."

There's no doubt that Australia's coal-fired electricity generators have been cognisant of the risk. They have been lobbying on the basis that their businesses have been at risk since way back before Australia took part in the Kyoto negotiations a decade ago. But last week, despite all they'd done, and despite all that Garnaut had said, they succeeded in convincing the Australian Government that its 2010 emissions trading scheme was unexpected and that they needed compensation.

In her green paper, Climate Change Minister Penny Wong justifies the idea this way: "If the change in regulatory arrangements was unanticipated and implemented without compensation, and investors viewed this as evidence that the Government was likely to change the regulatory regime in future in an unpredictable way, then investors might regard Australia's electricity market as a riskier investment proposition." Try submitting that sentence to the laugh test. That is, try to read it out loud without laughing.

The truth is that when it finally makes a decision on the type of emissions trading system that Australia will have from 2010, Parliament will have ended, not added to, the uncertainty that has been making Australia's electricity market a risky investment proposition.

Does Wong really think that investors will stay away from Australia's electricity market when they know what the rules are? Does she really think they haven't had a fair idea of what was coming for a decade? Apparently she does. Her green paper proposes making cash payments or payments in the form of free pollution permits to all of the coal-fired power stations that were in existence or planned before June 3, 2007. Why that date? Because it was the day on which former Prime Minister John Howard came out in support an emissions trading scheme, the day the idea "became bipartisan policy in Australia."

The Minister says that Sunday, June 3, 2007, was "the point beyond which investors could not reasonably argue that they had no knowledge of a potential carbon constraint." Where's the laugh test? It's actually worse than funny. By giving a gift to a class of firms that neither needs it nor deserves it (quite separate to the grant of free permits to exporting and import-competing carbon-intensive firms such as aluminium producers who will need them), Wong has opened the door to all sorts of special pleading.

Woodside Petroleum is just the first cab off the rank. If dirty coalburning power stations can get compensation, why not cleaner natural gas producers? It's the sort of endless special pleading for access to ever-widening and ever more complex loopholes that killed the goods and services tax the first time the Coalition proposed it. John Hewson was unable to explain why he would be taxing a cold pie but not a hot pie and lost the 1993 election.

Australia's existing coal-fired power stations won't need the compensation anyway. They will be able to pass on the extra cost of the emission permits. They will be encouraged to. It is how the scheme is meant to work. Eventually the higher price of power will prod some of us to use less of it, and eventually wind and commercial solar energy generators will become competitive against coal because they won't to buy emission permits.

But none of that will happen in a hurry. In the short term we will have no choice but to buy our power from the existing coal-fired generators. It is where our power comes from. It is likely that by the time those plants are out of commission they would have been out of commission anyway. The generators will doubtless pocket the gift Wong plans to give them (the NSW Government will be one of the biggest beneficiaries, owning many of the generators) but it won't encourage them to give up lobbying.

Why should they when another part of the minister's plan has the parliament resetting the five-yearly carbon-reduction target each year? The tobacco industry would love the opportunity. It shouldn't be given to a dinosaur industry that has served and will continue to serve Australia well and has known for years that its days were numbered.

NATIONAL: The Clean Energy Council today welcomed the release of the rebate application figures that the federal government has received for the Solar Homes & Communities Plan, for the period just prior and since the recent federal budget. The figures were announced on the day that the Hon. Peter Garrett, Environment Minister, spoke at the national ATRAA Conference and Exhibition, the annual event for the solar photovoltaic (PV) and small-scale renewable technologies.

Rob Jackson, GM Policy for the Clean Energy Council said: "We welcome the transparency from the government in providing this information, which will be critical in enabling the solar PV industry to plan for future demand and jobs growth." "Today's release of the figures is especially timely as hundreds of representatives from the solar PV industry, including installers, distributors and dealers, are in Melbourne to discuss the challenges and opportunities facing the industry nationally."

"The rebate scheme, particularly in the last two years, has allowed the industry to build capacity and capability. However the industry is now ready to transition to a nationally consistent gross feed in tariff; this policy will deliver the long term certainty needed for investment and jobs growth." "These figures demonstrate that the Australian solar PV industry continues to move from strength to strength and we look forward to working with government to discuss the transitional rebate arrangements until the gross feed in tariff policy is in place."

The Clean Energy Council also looks forward to participating in the upcoming roundtable discussions to deliver a framework to help households improve their energy efficiency, reduce their environmental impact and save on energy bills.